Congress’ Summer Fling With Marijuana

DISTRICT OF COLUMBIA: It’s not easy being the DEA these days. After an unprecedented losing streak on Capitol Hill, the once-untouchable Drug Enforcement Administration suffered last week what might be considered the ultimate indignity: A Senate panel, for the first time, voted in favor of legal, recreational marijuana.

Last Thursday, the Appropriations Committee voted 16-14 on an amendment to allow marijuana businesses access to federal banking services, a landmark shift that will help states like Colorado, where pot is legal, fully integrate marijuana into their economies. As significant as the vote was, it’s only the latest vote in a remarkable run of success marijuana advocates have had this year on Capitol Hill.

“The amendment was a necessary response to an absurd regulatory morass,” Montana Sen. Steve Daines, one of the three Republicans to support Thursday’s amendment, tells Politico, referring to the multifaceted and complex system of laws that have been enacted over the past four decades to prosecute a war on marijuana. It’s a war that began on or about May 26, 1971, when President Richard Nixon told his chief of staff Bob Haldeman, “I want a goddamn strong statement on marijuana …I mean one on marijuana that just tears the ass out of them.”

Bipartisan Marijuana Banking Bill Introduced In The Senate

DISTRICT OF COLUMBIA: Reflecting growing public support for changing the nation’s drug laws, a bipartisan group of senators on Thursday introduced the chamber’s first bill that would legalize banking for recreational marijuana companies.

Introduced by the Senate delegations from Oregon and Colorado, two of the first states to legalize recreational marijuana, the bill would prohibit the federal government from penalizing banks that work with marijuana businesses.

Though four states and the District of Columbia have legalized marijuana, the drug is still illegal under federal law. That makes it difficult for businesses operating in those legalized states to access financial services through the banking industry. Instead, those companies have to run all-cash operations that the senators say invites crime.

Fardon: ‘Careful’ Banks Can Invest In Legal Illinois Marijuana

ILLINOIS:  Banks that accept money from legal Illinois marijuana growers won’t “come on our radar for prosecution” if they are “careful” and “transparent” and “follow the laws,” U.S. Attorney Zach Fardon said.

Addressing the issue of Illinois’ move to legalize medical marijuana in the new year in public for the first time Wednesday morning, Fardon acknowledged the growing gap between lenient state marijuana laws and harsher federal laws presented him with a “tricky paradigm.”

But speaking to a breakfast meeting at the downtown Union League Club, Fardon offered qualified reassurance to legitimate businesses looking to cash in on legal weed.

“So long as they follow these laws that are in place, I don’t expect they will come on our radar for prosecution,” Fardon said, adding that it would take time for all the issues between the conflicting state and federal laws to be worked out.

 

Big U.S. Banks Seek New Clarity On Risks Of Marijuana-Linked Accounts

MISSOURI: Major banks are getting increasingly wary of some transactions with smaller banks that have begun to allow marijuana businesses to open accounts. Officials at the bigger institutions say they fear being in breach of anti-money laundering laws and are pressing federal authorities to make it clear what is legitimate and what is illegal.

The problem arises because in Colorado and Washington states, marijuana for general use is legal, and in a host of other states it is legal for certain medicinal purposes. But the business is still illegal under federal law, and U.S. banks are required to report transactions that they suspect involve money earned through illegal activities.

The bankers, including anti-money laundering officials at three of the biggest U.S. banks, expressed concern that their firms could face civil and even criminal penalties not only for dealing with any of the businesses directly but also handling money from the estimated dozens of small and mid-sized banks that have begun working with the marijuana shops or their suppliers.

The bankers say the U.S. Treasury Department’s anti-money laundering unit needs to clarify its expectations for the handling and reporting of wire transfers and other payments that involve people and entities linked to state-sanctioned marijuana businesses.

More Than 100 Banks, Credit Unions Serving Pot Businesses: Feds

DISTRICT OF COLUMBIA: There are 105 U.S. financial institutions providing banking services to marijuana dispensaries and other pot businesses, a top federal official is expected to reveal in a speech Tuesday.

The speech provides the most detailed look yet at the impact of marijuana guidance the Financial Crimes Enforcement Network issued to banks and credit unions in February, though it’s unlikely to resolve the lingering doubts that many banks still have.

Marijuana shops, which generate large amounts of cash and can be targets of thieves, have been lobbying for more access to the mainstream financial system. The guidelines were meant to encourage financial institutions to do business with the industry provided they met certain criteria, and Fincen Director Jennifer Shasky Calvery is expected to declare that the agency’s goal has been achieved.

“From our perspective the guidance is having the intended effect,” Shasky will say, according to a copy of her prepared remarks that Fincen provided to American Banker. “It is facilitating access to financial services, while ensuring that this activity is transparent and the funds are going into regulated financial institutions.”

However, the speech does not say whether the guidance has made banks and credit unions any less wary of the risks involved in working with an industry that, while legal in around 20 states, is still banned under federal law. Banks and credit unions may be especially wary of the pot business at a time when many in the financial industry believe that regulators have heightened expectations with regard to their compliance with the Bank Secrecy Act.

When Fincen released its guidance, it sought to walk a fine line between encouraging banks to take the plunge and warning of the consequences if they failed to comply with a detailed series of guidelines.

Shasky is expected to say Tuesday that the 105 banks and credit unions with connections to the pot business are located in states representing more than a third of the country. That compares with 87 financial institutions in Colorado alone that had relationships with marijuana dispensary businesses between June 2011 and September 2012, according to a Fincen report from last year.

The 105 institutions that are currently working with marijuana firms represent less than 1% of all banks and credit unions nationwide.

House Votes To Allow Marijuana-Related Banking

DISTRICT OF COLUMBIA:  The House voted Wednesday in support of making it easier for banks to do business with legal pot shops and providers of medical marijuana.

The 236-186 vote rejected a move by Rep. John Fleming, R-La., to block the Treasury Department from implementing guidance it issued in February telling banks how to report on their dealings with marijuana-related businesses without running afoul of federal money-laundering laws.

Marijuana dealing is still against federal law so banks who do business with marijuana dispensaries could be accused of helping them launder their money. Federal money laundering convictions can mean decades in prison.

The Treasury guidance was intended to give banks confidence that they can deal with marijuana businesses in states where they’re legal. Many banks are still reluctant to do so.

 

Only One Hiccup For Pot Shop’s Opening Day

WASHINGTON:  The first pot shop to open in Bellingham and the state,Top Shelf Cannabis, had one hiccup in an otherwise successful opening.

Chase Bank refused to give them change for smaller bills.

Manager Sigrid Williams says when they started to run out of one and five dollar bills, they tried to ask Chase Bank for change.

She says they’re hoping to work out an arrangement with a smaller bank in Seattle, soon.

This Las Vegas Bank Eager To Do Business With Would-Be Marijuana Dispensary

NEVADA:  If finance executives are worried about getting involved with medical marijuana clients, don’t tell Las Vegas banker John Sullivan.

First Security Bank of Nevada, led by CEO Sullivan, has signed on to manage cash and other banking transactions for would-be dispensary operator GrowBLOX Sciences.

GrowBLOX, which said it “operates with the utmost compliance integrity,” said its arrangement with First Security would eliminate the “cash only” status of medical marijuana shops that has left them vulnerable to devastating theft.

 

Colorado’s New Pot Banking Law Won’t Solve Cash Problems

COLORADO: Colorado Gov. John Hickenlooper signed a bill Friday designed to create the world’s first state-level banking system for legal cannabis companies, which have complained that their lack of access to basic banking services creates difficult and dangerous risks.

But the financial industry quickly cast doubt on whether the legislation will address issues faced by marijuana businesses in the state, where recreational pot became legal this year. Asked what it would accomplish, Colorado Bankers Association CEO Don Childears said: “Basically, absolutely nothing.”

“We don’t think it can be effective, and it can never get off the ground,” he said.

The bill allows legal marijuana shops to create a makeshift financial network that would help them gain access to credit and merchant services.

Pot Finance Co-Ops Likely To Fail, But They’re Better Than Nothing

COLORADO:  A hurry-up bill that whizzed through the final days of the Colorado legislature to create the world’s first financial cooperatives for the marijuana industry still faces about two years of added preparation, backers now say.

But despite the initial optimism surrounding House Bill 1398, those familiar with the Federal Reserve System — the agency whose approval is required for the whole plan to work — say it’s unlikely to meet with anything but rejection.

Still others say the amount of effort needed to create the co-op system, which is little more than a credit union for the marijuana industry, is a wasted exercise in learning what was already known: that only Congress can make the changes needed to allow the pot industry access to normal banking.

“Arguably it’s all a charade, thinking that some members of the (Federal Reserve) board … will allow access to the payment system,” said Bert Ely, a banking structure consultant in Alexandria, Va. “If the Fed can’t let them in, the legislature’s action has no meaning.”